Reshaping Business With Artificial Intelligence

Closing the Gap Between Ambition and Action

September 06, 2017

by: Sam Ransbotham, David Kiron, Philipp Gerbert, and Martin Reeves

Disruption from artificial intelligence (AI) is here, but many company leaders aren’t sure what to expect from AI or how it fits into their business model. Yet with change coming at breakneck speed, the time to identify your company’s AI strategy is now. MIT Sloan Management Review has partnered with The Boston Consulting Group to provide baseline information on the strategies used by companies leading in AI, the prospects for its growth, and the steps executives need to take to develop a strategy for their business.

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Expectations for artificial intelligence (AI) are sky-high, but what are businesses actually doing now? The goal of this report is to present a realistic baseline that allows companies to compare their AI ambitions and efforts. Building on data rather than conjecture, the research is based on a global survey of more than 3,000 executives, managers, and analysts across industries and in-depth interviews with more than 30 technology experts and executives. (See “About the Research.”)

The gap between ambition and execution is large at most companies. Three-quarters of executives believe AI will enable their companies to move into new businesses. Almost 85% believe AI will allow their companies to obtain or sustain a competitive advantage. But only about one in five companies has incorporated AI in some offerings or processes. Only one in 20 companies has extensively incorporated AI in offerings or processes. Less than 39% of all companies have an AI strategy in place. The largest companies — those with at least 100,000 employees — are the most likely to have an AI strategy, but only half have one.

Our research reveals large gaps between today’s leaders — companies that already understand and have adopted AI — and laggards. One sizeable difference is their approach to data. AI algorithms are not natively “intelligent.” They learn inductively by analyzing data. While most leaders are investing in AI talent and have built robust information infrastructures, other companies lack analytics expertise and easy access to their data. Our research surfaced several misunderstandings about the resources needed to train AI. The leaders not only have a much deeper appreciation about what’s required to produce AI than laggards, they are also more likely to have senior leadership support and have developed a business case for AI initiatives.

The research and analysis for this report was conducted under the direction of the authors as part of an MIT Sloan Management Review research initiative in collaboration with and sponsored by The Boston Consulting Group.

AI has implications for management and organizational practices. While there are already multiple models for organizing for AI, organizational flexibility is a centerpiece of all of them. For large companies, the culture change required to implement AI will be daunting, according to several executives with whom we spoke.

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About the Authors:

Sam Ransbotham is an associate professor in the information systems department at the Carroll School of Business at Boston College, as well as guest editor for MIT Sloan Management Review’s Artificial Intelligence Big Ideas Initiative. He can be reached on Twitter @ransbotham.

David Kiron is the executive editor of MIT Sloan Management Review, which brings ideas from the world of thinkers to the executives and managers who use them.

Philipp Gerbert is a senior partner and managing director at The Boston Consulting Group’s Munich, Germany, office. He is BCG’s global topic leader for digital strategy and a BCG Henderson Institute Fellow for the Impact of Artificial Intelligence on Business. He can be reached at gerbert.philipp@bcg.com.

Martin Reeves is a senior partner and managing director at The Boston Consulting Group and the director of the BCG Henderson Institute, which brings ideas and inspiration to forward-looking leaders.

Contributors

Sebastian Steinhäuser, principal and member of the AI core team, BCG

Patrick Ruwolt, consultant and member of the AI core team, BCG

Allison Ryder, senior project editor, MIT Sloan Management Review

Acknowledgments

We thank each of the following individuals, who were interviewed for this report:

References

1. At the time of his interview, Vishal Sikka was serving as CEO and managing director of Infosys. He has since resigned from that position to become executive vice chairman prior to the publication of this report.

2. We built a composite index of organizational understanding of AI based on the responses to nine survey questions related to AI understanding. This index, combined with the level of organizational adoption of AI, determined classification into the four clusters of organizations.

I completely agree with the section on “Expectations for Change Across Industries and Within Organizations”. People definitely have to be aware if they are in an industry that is at high risk of being replaced by AI. I read this article on jobacer.com that listed out similar industries that could be easily replaced. It also gave helpful tips on how to find a long-term stable career with the exponential growth of technology in the 21st century.